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The Impact of Business Life Cycle and Performance Discrepancy on R&D Expenditures-Evidence from Taiwan

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  • Shu-Chin Chang
  • She-Chih Chiu
  • Pei-Cheng Wu

Abstract

The purpose of this study is to examine the impact of business life cycle and performance discrepancy on Research and Development (R&D) expenditure. Specifically, we argue that managers of firms in different stages of business life cycle make R&D decisions according to their perception of performance discrepancy. We investigate three stages of business life cycle- growth stage, maturity stage, and stagnant stage. Based on a sample of firms listed in Taiwan Stock Exchange, we find that managers of firms in the growth stage tend to increase R&D expenditure when they experience positive performance discrepancy. This implies that growing firms’ slack-resource-driven behavior is leads to the increase in R&D expenditure. There is some evidence that managers of firms in the mature stage tend to increase R&D spending when they experience negative performance discrepancy, indicate that negative performance discrepancy triggers the problem-driven search behavior of managers of mature firms.

Suggested Citation

  • Shu-Chin Chang & She-Chih Chiu & Pei-Cheng Wu, 2017. "The Impact of Business Life Cycle and Performance Discrepancy on R&D Expenditures-Evidence from Taiwan," Accounting and Finance Research, Sciedu Press, vol. 6(3), pages 135-135, August.
    • Handle: RePEc:jfr:afr111:v:6:y:2017:i:3:p:135
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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